Monday messages

Budget Overview

Dear Colleagues: Except for formal adjournment on May 31, the Legislature has concluded its 2001 session. The final days of the session were highly contentious with funding of education at the center of much of the contention. The April revision of revenue forecasts, identifying a $206 million dollar shortfall in state revenues, forced the Legislature to further shrink what was already a conservative budget for FY 2002. On balance, I believe higher education fared well, and I was pleased to see the Governor and the leadership of both House and Senate join together to invest in KU and higher education. We owe them a debt of thanks and I hope you will express this to them. KU received a budget increase of 4.02% for FY 2002.

Salaries and Wages
The Regents budget request again focused on improving faculty compensation. A special plea was also made on behalf of non-faculty, unclassified employees. In the end, the promise to fund Senate Bill 345 (the Higher Education Reorganization Bill) was kept, and faculty needs were recognized. Classified staff, faculty and non-faculty unclassified staff will receive a 1.5% increase in July and an additional 1.5% increase effective in March, 2002. A similar increase was approved for housestaff and students. At the close of FY 2002, all employees other than faculty will realize an average 3% annualized increase and faculty will realize an average annualized increase of 6%. Unclassified salary increases are to be awarded on the basis of merit while classified increases will be cost-of-living.

Additionally, the authorization for classified employees included the abolition of steps one through three of the classified pay matrix effective February 4, 2001. All employees on steps one through three moved to step four at that time. The time in grade requirements for steps four and five were also reduced from one year to six months. Increasing the entry rate is very positive, but I am disappointed no step increases were approved for FY 2002. The budget does continue funding for longevity bonuses.

Other Operating Expenditures
The Legislature approved a 1.0% increase for OOE for FY 2002. Unfortunately, no funding was provided for servicing Joseph R. Pearson Hall on the Lawrence campus. The Legislature adopted the Governor's recommendation providing for the continuation of Tuition Equity for the Lawrence campus, which allows the University to retain $554,096 of tuition income for OOE purposes.

The Legislature again approved awarding 30 new medical student loans. Further, the Legislature approved appropriations to the Medical Center for both FY 2002 and 2003 totaling $1,250,000 in each year from tobacco funds: $1,000,000 per year for pediatric research and $250,000 for the TeleKidCare program.

Other Budget Adjustments
Many severe budget reductions were initially recommended. In the end, we were able to state KU's case, and minimize the impact of those budget reductions. The Lawrence campus will realize a $775,565 base reduction and KUMC a $408,623 base reduction, as a result of the budget tightening imposed by the Governor and Legislature. The State previously funded $2 for each $1 technology fee paid by students.

For FY 2002 the budget provides a straight dollar-for-dollar match, meaning that $687,392 in State funds will be committed to technology funding in FY 2002. At one point, we were facing the prospect of no state funding for technology. In the final weeks of the session, the Governor's support for this initiative was crucial.

Conclusion
This was a very difficult budget year because of the erosion of State tax collections. Although the Governor and Legislature endorsed the funding for faculty salary increases in the Higher Education Governance bill, basic increases for other employees were very modest. We will work closely with the Board of Regents and the Governor and Legislature in the future to ensure the promise of Senate Bill 345 is kept and that salary needs of all employees are addressed.

Finally, both the Governor and the Legislature have endorsed the concept of block grants for Regents universities. While this endorsement had little impact for FY 2002, it is very positive for FY 2003 and beyond. Under this initiative we will have the responsibility of managing our tuition dollars and we will be held accountable for that management. Budget requests seeking increases in the level of State funding will be made as a block grant rather than individual line items; the block grant concept is another example of how the University will have greater flexibility, but also greater accountability.

The FY 2003 budget developed in the weeks ahead will be submitted in this new block grant format and I am optimistic that the ultimate outcome will be positive for all of higher education. For the first time the level of State General Fund support will not be influenced by the availability of tuition funding.

In the end, I believe that legislative leaders and the Governor made a positive statement about higher education. Their actions said that they believe that universities of high quality are the key to the future of the State of Kansas. Our task is to fulfill that belief by doing everything we can to make KU a better university next year.